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Baltic Report: January 4, 2002

4 January 2002, Volume 3, Number 1
The 19th session of the Baltic Assembly, which met in Tallinn on 14-15 December, adopted an appeal to the parliaments of Estonia, Latvia, and Lithuania to organize simultaneous referenda on membership in the European Union, BNS reported. Latvian Prime Minister Andris Berzins suggested in November that 23 August 2003 would be a suitable date for commemorating the Baltic unity shown in 1989, when on the 50th anniversary of the signing of the Molotov-Ribbentrop Pact more than 2 million people formed a human chain stretching from Vilnius to Tallinn via Riga calling for independence. However, Estonian Foreign Minister Toomas Hendrik Ilves had argued that there is no need for the Baltic states to hold referendums together. He said 23 August is "not the best idea" for Estonia since "the EU has several candidate states, not one Baltic state with three provinces," and therefore, there is no need for a simultaneous vote. The assembly also adopted a resolution calling on the Baltic governments to take steps intended to reduce excessive consumption of alcohol by working together to equalize excise tax rates, and to prevent alcohol smuggling and the production of low-quality alcohol.

Russian President Vladimir Putin in a live broadcast on the ORT and RTR television channels on 24 December compared Russian residents in the Baltic countries with Albanians in Macedonia and said his countrymen there should have rights equal to those Albanians have in Macedonia, BNS reported. He noted that pressure from the EU and the Organization for Security and Cooperation in Europe (OSCE) convinced Macedonia to pass a constitutional amendment that the 20 percent Albanian community should have a 20 percent representation in power organs and asserted that Russians should also have representation in the Baltics that reflects their numbers.
* Belarus Foreign Ministry spokesman Pavel Latushko on 20 December criticized the decision by the OSCE to close its missions to Estonia and Latvia ,saying that this reduced confidence in this organization as an "objective and unbiased" international institution, BNS reported. He claimed that "these countries still continue mass violation of rights of their Russian-speaking residents."

Shortly after the parliament passed a 2002 budget on 19 December, Mart Laar announced that he will resign from his post on 8 January, ETA reported. He said he had intended to announce his decision immediately after he learned that the Reform Party decided to withdraw from its coalition with the Pro Patria Union and Moderates in the Tallinn City Council and form one with the opposition Center Party. Laar said he delayed his resignation until the passage of important measures, such as the 2002 budget. Parliament approved a balanced budget of 33.13 billion kroons ($1.9 billion) by a vote of 52 to 39. The budget is 11.2 percent greater than the 2001 budget. The resignation of the prime minister automatically means the resignation of the whole government, and President Arnold Ruutel will have 14 days (until 22 January) to select a new candidate for the post. Laar suggested that Reform Party Chairman Siim Kallas could be this candidate.

Arnold Ruutel held talks with Reform and Center Party chairmen Siim Kallas and Edgar Savisaar on 27 December on the formation of a new government, ETA reported. Kallas declared for the first time that he saw no more chance of restoring the coalition with the Pro Patria Union and Moderates. He admitted that not all the members of his party favor forming a coalition with the Center Party, but suggested that this would be a better option than early elections. Savisaar said an alliance with the Reform Party is possible in principle, but that only a majority government would be practical. The Estonian dailies "Postimees" and "Eesti Paevaleht" predicted on 28 December that Kallas is the most likely new prime minister, and speculated that the United People's Party could be a third member of the coalition.

Parliament on 18 December rejected by a vote of 14 to 46 a bill proposed by Reform Party deputies Ignar Fjuk and Neinar Seli to make the personal identification cards that will be introduced next year voluntary and not mandatory, BNS reported. The Reform Party earlier supported the bill, but changed its position in order to show its desire to maintain the ruling parliamentary coalition with the Pro Patria Union and Moderates. The coalition had been weakened by the Reform Party's decision to form a coalition with the opposition Center Party in the Tallinn City Council. The Interior Ministry originally proposed that fees for obtaining the ID cards be 100 kroons ($5.80) and 380 kroons for passports, but those amounts were amended to 150 kroons apiece.

Mart Laar told a forum entitled "Year 2001 in Estonian Politics" in Tallinn on 17 December that the presidential campaign was the most negative event of the year, leading politicians to sacrifice needed administrative-territorial reforms, ETA reported. He also expressed regret that during the election campaign the parliament gave up on a plan to condemn communism as an ideology. Tartu Mayor Andrus Ansip of the Reform Party responded by saying that there was no need for administrative-territorial reform, adding that the merging of local administrative units in Belgium and Germany resulted not in savings but in higher administrative costs. Villu Reiljan, the chairman of the opposition People's Union, called Laar a hypocrite on the issue of condemning communism, saying, "If he really wanted to adopt this decision, he ought to have arranged a roundtable of political parties to discuss the matter," since there is no political force in Estonia that opposes the move.

Negotiations with U.S.-based NRG Energy that began in 1995 on the privatization of Narva Elektrijaamad (Narva Power Plants) seem likely to fail because the Estonian Energy (EE) privatization committee has rejected bank requests to postpone the signing of a loan agreement, ETA reported on 20 December. NRG Energy had signed a contract for a 4.5 billion kroon ($258 million) loan (see "RFE/RL Newsline," 7 September 2001) to renovate the plants, but after the 11 September terrorist attacks in the U.S. the banks decided to ask for state guarantees for the loan. EE Council Chairman Juri Kao said the loan was a precondition of the sale of the plants and that EE will be able to finance the power stations' renovation in stages. The Center Party, which seems likely to have greater influence in the new government to be formed in January, has always opposed the privatization deal as unfavorable for Estonia.
* Moderates Chairman and Foreign Minister Toomas Hendrik Ilves on 19 December rejected the suggestion by Reform Party Chairman Siim Kallas that he should be the next prime minister, BNS reported. He said that a minority government with the Pro Patria Union was not realistic.
* The new Tallinn City Council formed by a coalition of the Reform and Center parties on 19 December voted to cancel the 2002 budget of 5.2 billion kroons ($298 million), including a 1.5 billion kroon loan, approved by the previous administration, BNS reported the next day. It pledged to approve a new budget of 3.62 billion kroon in January.
* The European Union decided on 14 December to grant Estonia 3 million euros ($2.67 million) under the EU PHARE Cross-Border Co-operation program for the development of its border regions, ETA reported on 17 December. One million euros is meant for financing small projects (ranging from 10,000 to 50,000 euros), and 2 million euros is directed to financing larger projects (50,000-300,000 euros) including investments.
* Directors from Eesti Raudtee (Estonian Railway) and the International Finance Corporation (IFC), a unit of the World Bank, signed a $50 million loan contract on 18 December, BNS reported the next day. Most of the money will be used to buy 58 Brightstar C36-7 and 19 C30-7A locomotives rebuilt especially for Estonia by General Electric. The locomotives should be delivered by the end of 2002.
* The Finance Ministry announced that by 20 December the state budget had collected 29.82 billion kroons ($1.72 billion) or 33 million kroons more than planned, ETA reported on 21 December. It estimated that another 700 million kroons would be collected before the end of the year. The surplus -- coming from higher-than-anticipated receipts of value-added tax, social tax, and corporate income tax -- will be used to cover excessive spending in the past year, especially for subsidies to the disabled, and also added to Estonia's stabilization reserve.
* The government and confederation of trade unions EAKL signed an agreement on 17 December on increasing the pay of civil servants in 2002, ETA reported. The salaries of civil servants will be hiked by at least 300 kroons ($17) a month from 1 January 2002, with most civil servants getting a 15 percent pay rise. The government also pledged to set the minimum salary of policemen at 5,050 kroons on 1 September 2002. The agreement still has to be approved by the parliament.
* The government on 18 December approved an earlier agreement on hiking the minimum monthly salary by 250 kroons from 1 January to 1,850 kroons ($106) and the minimum hourly wage from 9.40 to 10.95 kroons, ETA reported.
* The parliament on 19 December by a vote of 41 to zero adopted amendments without any major debate to the broadcasting act which prohibit paid commercials on the public Eesti Television (ETV) television channel, ETA reported. The ban will go into effect from 1 July. The new law also requires the two private commercial stations to pay 15 million kroons ($850,00) in annual licensing fees.
* U.S. Ambassador Joseph M. De Thomas in an interview in "Postimees" on 27 December said that Estonia's admission to NATO does not depend on the privatization of the Narva power stations to the American company NRG Energy, ETA reported. He also rejected the recent claims by NRG Energy President Dave Peterson that the failure of the privatization would leave Estonia outside the doors of the EU.
* Agriculture Minister Ivari Padar told the Finnish business newspaper "Kauppalehti" on 17 December that Estonia next year will harmonize its veterinary regulations with the relevant EU legislation, easing restrictions on imports of beef from countries, such as Finland, which have recorded cases of mad cow disease, BNS reported.

The Permanent Council of the Organization for Security and Cooperation in Europe (OSCE) decided in Vienna on 18 December not to extend the mandate of its mission to Latvia, in effect ending its nine-year existence on 1 January, BNS reported. In his report to the Council, the head of the OSCE mission to Latvia, Peter Semneby, noted Latvia's achievements in building a democratic and integrated community, citing the smooth naturalization process, the successful implementation of the national program for teaching Latvian, the establishment of the Public Integration Fund, and the improved performance by the National Human Rights Office. Praising the initiative of President Vaira Vike-Freiberga to amend the election law by abolishing the language requirement for candidates to the parliament and local councils, he recommended closing the mission. Vike-Freiberga welcomed the decision as proof that Latvia is a democratic country. Russia opposed the closing of the mission, arguing that the Russian minority is still not suitably protected from discrimination.

The U.S. Peace Corps will end its programs in Latvia in September after 10 years of operation, LETA reported on 19 December. Since 1992, 198 volunteers have served in Latvia, primarily teaching English as a foreign language and assisting small businesses and non-governmental organizations (NGOs) in improving their management techniques. By the time it ends its operations, the organization's volunteers will have taught English to nearly 22,000 students, and helped some 5,500 business people and NGO officers to develop their financial and organizational management skills. The volunteers served for two years or more in 67 towns and villages throughout the country.

In a previously unplanned meeting in Brussels on 21 December, Latvia's chief negotiator with the EU, Andris Kesteris, concluded the chapter on transport, BNS reported. An agreement was reached on the immediate opening of the EU trucking market for international road transport to and from Latvia as soon as it joins the EU. A two-year transition period for opening EU-member domestic trucking markets was negotiated. Latvia was granted two transition periods that will allow its carriers to better adapt to competition in the EU transport market. Latvia will have until the end of 2006 to reach the EU-required minimum financial-spending level for domestic road-transport operations, and until 1 January 2005 to require tachometers on transport vehicles involved in domestic road transport. Latvia has closed 23 of 31 EU membership chapters.

Parliament by a vote of 68 to one, with 17 abstentions, appointed Ilmars Rimsevics as Bank of Latvia president, LETA reported. The 36-year-old Rimsevics, who had been the bank's vice president and principal deputy to former central bank President Einars Repse, will begin his six-year term of office on 21 December.

Michel Sapin assured parliament Deputy Chairman Rihards Piks on 20 December in Riga that France will assist Latvia in strengthening its state administration abilities not only in the framework of bilateral cooperation, but also on international projects, BNS reported. He later adopted a joint statement with Minister for State Reforms Janis Krumins calling for increased cooperation in areas related to Latvia's European integration efforts. Prime Minister Andris Berzins informed Sapin that Latvian officials are being offered the opportunity to learn French, since good French-language skills are necessary to boost cooperation between the two states.

The 5th Congress of the party For Fatherland and Freedom/LNNK was held in the Riga Congress Center on 15 December, LETA reported. Maris Grinblats was re-elected party chairman, receiving support from 466 of the 610 delegates. Environmental Protection and Regional Development Minister Vladimirs Makarovs and parliament Chairman Janis Straume were re-elected as deputy chairmen, and a 10-member board with greater representation of the party's regional offices was named. The congress also passed a resolution declaring that the Latvian language proficiency requirements for candidates to the parliament and local councils should be maintained since they have yielded positive results. All the deputies in the parliament speak Latvian, but Russian is still the working language in some of the local councils even 10 years after independence. The congress also adopted a resolution calling for the passage of the law "On Preservation and Development of Riga's Historic Center," which would regulate planning and construction in those parts of Riga that are included on UNESCO's list of the world's cultural monuments.

The long-serving former Bank of Latvia President Einars Repse announced on 17 December that the official founding congress of the new party Jaunais laiks (New Era) will take place on 2 February, LETA reported. He said the preamble of the new party and its positions on education, health, and science are being prepared.
* Japanese First Deputy Foreign Minister Shigeo Uetake had talks in Riga on 18 December with Foreign Minister Indulis Berzins and Foreign Ministry State Secretary Maris Riekstins, BNS reported. Uetake expressed support for Latvia's membership in the EU and NATO, noting it would promote welfare and stability in the region.
* Prime Minister Andris Berzins in a letter to his Russian counterpart, Mikhail Kasyanov, urged him to appoint a new co-chairman of the Latvian and Russian intergovernmental commission, which in effect stopped working in October when Russian President Vladimir Putin removed National and Migration Affairs Minister Aleksandr Blokhin from the post, BNS reported on 22 December.
* President Vaira Vike-Freiberga on 23 December sent back to the parliament a controversial law on amendments to the Commercial Code for a second review, LETA reported. She pointed out that the amendments contain many contradictory points and are at odds with various existing laws. The law, which was passed in March 2000, should go into effect from 1 January 2002.
* Prime Minister Andris Berzins discussed the operations of Russian oil company LUKoil in Latvia on 18 December in Riga with the company's president, Vagit Alekperov, LETA reported. They expressed satisfaction with the current situation, under which LUKoil exports about 2.8 million tons of mostly crude oil through the port of Ventspils.
* Internal Affairs Minister Mareks Seglins during a visit to the U.S. on 17-19 December signed the International Convention for the Suppression of the Financing of Terrorism, LETA reported. It requires Latvia to declare as criminal offenses actions described in the addendum to the convention relating to financing terrorism. The convention has been signed by 15 countries, including the U.S., U.K., Russia, Canada, Estonia, France, and Egypt.
* The Latvian government on 18 December approved guidelines for privatization of the state-owned Latvian Shipping Company (LASCO) under which 51 percent of the company will be sold on the stock exchange for cash and 32 percent for privatization vouchers, BNS reported. Another 10 percent would be transferred to the state pension fund special budget, 6 percent sold to LASCO current and retired employees, and 1 percent assigned to the privatization reserve.
* A farmer from the Zemgale region on 22 December filed the first project in Latvia seeking financing from the EU SAPARD fund, BNS reported. Latvia plans to get some 13.5 million lats ($21.36 million) from SAPARD funds annually.
* The Naturalization Administration announced on 26 December that 820 people received Latvian citizenship through the naturalization procedure in November and 9,839 people throughout the year, LETA reported.
* The current ambassador to the OSCE, Edgars Skuja, will be appointed Latvia's ambassador to Estonia in January, LETA reported on 17 December. He replaces Gints Jegermanis, who will be appointed ambassador to the UN.
* Defense Minister Girts Valdis Kristovskis expressed support for the suggestion by Latvian Academy of Sciences President Janis Stradins on 19 December that Latvia launch a satellite, BNS reported. Edgars Bervalds, the director of the international radio astronomy center in Ventspils, noted that the British company Surrey Space Centre had in 1999 offered a project on producing and launching satellites with Latvia and that the Ventspils center could take care of communications.

Mikhail Brudno told Prime Minister Algirdas Brazauskas in Vilnius on 18 December that the Russian oil company Yukos is still interested in finalizing the deal with Williams International signed in June, ELTA reported. Yukos agreed to pay $75 million, lend another $75 million, and supply 4.8 million tons of crude oil annually to the Mazeikiai refinery in exchange for a 26.85 percent share of Mazeikiu Nafta, which Williams operates. Economy Minister Petras Cesna and Finance Minister Dalia Grybauskaite also attended the meeting. Randy Majors, the board chairman of Mazeikiu Nafta, recently announced that Williams was canceling the agreement, but expected negotiations to continue in 2002. Brudno told reporters in Moscow on 17 December that Yukos is willing to continue the negotiations if someone is to replace Majors as the head of Williams' negotiating team. Williams International President Randy Barnard responded by saying he did not see any reason to replace Majors.

Defense Minister Linas Linkevicius and Major General Bruce Scott from the U.S. Army Intelligence and Security Command signed an agreement on 17 December for Lithuania to purchase Javelin medium-range antitank weapons systems for 38.5 million litas ($9.63 million), BNS reported. They noted that Lithuania is the first country in Europe to purchase the weapons. U.S. Ambassador to Lithuania John Tefft declared that, among current NATO candidate countries, Lithuania has earned a reputation as a country that is making progress in developing its armed forces to meet modern Western standards. Tefft called the weapons purchase another indication of Lithuania's determination to join NATO. According to the agreement, the weaponry should reach Lithuania by 2004, but the U.S. agreed to look into possibilities for supplying Javelin systems by October, the date by which Lithuania plans to establish a mechanized infantry battalion at Rukla. The Javelin is a portable weapon with a range of some 2,500 meters, and weighs 25 kilograms.

Former Prime Minister Rolandas Paksas and 10 other liberal deputies announced on 21 December that they are leaving the Liberal Union faction, ELTA reported. He attacked his colleagues for failing to function as an effective opposition and for plunging into "mutual squabbling and suspicions with respect to those who disapprove of party dictatorship and try to keep aloof." Paksas noted that he is unhappy with the faction's failure to present his nomination for the post of parliament deputy chairman. Liberal Union Chairman Eugenijus Gentvilas later told a press conference that the departure of Paksas and his supporters is "a part of a scenario planned in advance." He suggested that Paksas has lately been working for his personal benefit rather than that of the party and feared that he would not be chosen as the party's candidate for president.

First Deputy Foreign Minister Shigeo Uetake arrived in Vilnius on 19 December to mark the 10-year anniversary of restored diplomatic relations between the two countries and to boost bilateral relations, ELTA reported. He is the highest-ranking Japanese official ever to visit Lithuania. Uetake discussed with President Valdas Adamkus scientific exchanges and the expansion of economic relations between their countries. Foreign Minister Antanas Valionis proposed that political visits be increased and that the countries' foreign ministries hold regular consultations. Uetake also traveled to Kaunas, where he was greeted by Mayor Erikas Tamasauskas at the home of former Japanese diplomat Chiune Sugihara, who saved the lives of thousands of Jews during World War II by issuing them visas to Japan.

President Valdas Adamkus on 22 December vetoed parliament's recent amendments on nationalized property. The parliament by a vote of 70 to 27, with six abstentions, had amended the law on restoration of ownership rights to nationalized real estate on 20 December, ELTA reported. The amendments would have granted tenants the right to privatize the apartments they inhabit even if the property rights of the owners had been restored. The former owners were to receive compensation from the state, but it is unclear when and how the necessary funds would be obtained. The parliament by a vote of 63 to 42, with eight abstentions, also adopted a new Law on Profits Tax, which reduces the profit tax from 24 to 15 percent beginning on 1 January 2002, but abolishes the previous zero tax rate on reinvested profits.

An extraordinary congress held in Vilnius on 15 December by the New Democracy Party (NDP) and the Peasants Party (VP) resulted in their merger into the Peasants and New Democracy Union, "Kauno diena" reported on 17 December. The merger was not totally unexpected, as the four VP and three NDP deputies in parliament had been working in a common faction. NDP leader and former Prime Minister Kazimiera Prunskiene was elected head of the new party, with VP Chairman Ramunas Karbauskis as her first deputy chairman. The congress also elected two deputy chairmen from each party: Gintaras Didziokas and Gema Umbrasiene from the NDP, and Viktoras Rinkevicius and Juozas Bertasius from the VP. The other posts in the party's leadership were distributed on a proportional basis, with the VP taking nine of the 15 seats on the executive board, and 53 of the 80 seats on the party's council. The congress also elected Prunskiene as its candidate for Lithuania's presidency.
* Noting that the budget for 2002 contained less funding for health care and education than required by other laws, President Valdas Adamkus nonetheless signed the law on 22 December, BNS reported. The law forecasts revenues of 10.331 billion litas ($2.58 billion) and expenditures of 11.466 billion litas.
* The Lithuanian delegation on 21 December in Brussels completed the transport and financial-control chapters of its membership negotiations with the EU, BNS reported. In the transport chapter, Lithuania was granted three transition periods. In the financial-control chapter, it must ensure the creation of a state audit system before it joins the EU. Lithuania has now closed 23 of the 31 EU membership chapters.
* The chairman of the parliament's liaison group with the Russian Duma, Algimantas Matulevicius, announced on 22 December that during recent talks in Moscow, Duma Foreign Affairs Committee Chairman Dmitrii Rogozin linked the Duma's delay in ratifying the Lithuanian-Russian border treaty with the resolution of problems that the Kaliningrad region will encounter after Lithuania enters the European Union, BNS reported. Other Duma deputies also mentioned the law adopted by the previous parliament which estimated the damage inflicted on Lithuania by the former Soviet occupation at $20 billion.
* First Deputy Governor of the Kaliningrad Region Mikhail Tsikel headed a delegation to Vilnius on 27 December which discussed how to improve cooperation in transport and modernize facilities at mutual border crossings with Deputy Foreign Minister Evaldas Ignatavicius, BNS reported. They agreed to expand cooperation between the ports of Klaipeda and Kaliningrad and talked about introducing new Lithuanian visa requirements on travelers from Kaliningrad.
* Leaders of the Lithuanian Archive Department and History Institute, and the Russian Federal Archive Service and Science Academy signed a memorandum on 14 December in Vilnius for the joint publication of documents under the title "Lithuania and the Soviet Union During World War Two (1939-1945): International Aspect," ELTA reported.
* Finance Minister Dalia Grybauskaite and European Commission delegation head in Lithuania Michael Graham signed two PHARE 2001 financial memoranda assisting Lithuania's efforts to join the EU on 14 December, BNS reported. According to the memoranda, the EC will grant 15.58 million euros ($13.87 million) in financial assistance, with Lithuania allocating 4.28 million euros in co-financing. More than half of the sum will be directed to regional environment projects. On 18 December they signed another agreement by which the EU will grant 55 million euros in aid for the closing of the nuclear power plant at Ignalina.
* Deputy Economy Minister Nerijus Eidukevicius announced on 20 December that the French group Gaz de France and the consortium of Germany's Ruhrgas and EON Energie qualify as potential strategic investors in the state-owned natural gas utility Lietuvos Dujos (Lithuanian Gas), BNS reported the next day. They will be allowed to bid for a 34 percent stake in the utility.
* The parliament on 21 December by a vote of 35 to two, with 20 abstentions, decided to increase the number of draftees in the armed forces next year to 5,000, BNS reported. The deputies also passed a decision allowing 12 Lithuanian military doctors to participate in Operation Enduring Freedom, conducted by the United States-led antiterrorist coalition. The doctors would serve under Czech command in the Czech 6th military field hospital and could be placed in Tajikistan or Uzbekistan.
* The parliament on 21 December by a vote of 48 to 23 with two abstentions amended the higher (university) education law by providing that students pay a tuition fee of 1,000 litas ($250) per semester, ELTA reported. It also eased the law on charity by requiring donors to submit reports to the State Tax Inspectorate about charity they provide on an annual instead of quarterly basis. Charity providers will also not be required to submit separate reports about donations to the Statistics Department.
* Power utility Lietuvos Energija (Lithuanian Energy) on 17 December sold $14 million of the $45 million in Belarusian debt for electricity, BNS reported. The utility will receive about $7.8 million in cash from four companies which offered bids.
* Prime Minister Algirdas Brazauskas told a meeting of the Business Employer Confederation and Light Industry Enterprise Association on 20 December that the shadow economy in Lithuania comprises about 30 percent of the country's economy.
* Lietuvos Taupomasis Bankas (Lithuanian Savings Bank, or LTB) and Lithuanian-based Hansabankas, both owned by Estonia's Hansabank, completed their merger process on 21 December and will operate under the name of Hansa-LTB.